How to Do Bookkeeping for Your Freelance Business

Hi there! Today, I want to share some tips on how to handle bookkeeping for your freelance business. Let me start with a quick story. Not long ago, we had a chance to secure investment for our video freelance business. Unfortunately, I didn’t keep proper bookkeeping records, and the investor couldn't assess our financial health. That opportunity slipped away because of it. So, let’s ensure you don’t make the same mistake.

What is Bookkeeping?

Think of bookkeeping as the financial diary of your business. It helps you track all your transactions and keep a clear picture of your financial situation.

Why is Bookkeeping Important?

• Track Transactions: Know if you're making a profit or losing money.
• Make Informed Decisions: Decide when to spend or save based on accurate data.
• Budget for Taxes: Understand how much you'll owe to save accordingly.
• Show Financial Health: Present a clear picture to potential investors or banks.

Key Bookkeeping Terms

• Debit: Money leaving your account. For example, buying a camera for $2,000.

• Credit: Money coming into your account. For instance, receiving $1,000 from a client.
• Asset: Items you use for your business, like cameras or computers.
• Liability: Money you owe, such as credit card debt or loans.
• Capital: The money used to start your business, like savings from your paycheck.
• Income: Money coming into your business.
• Expenses: Money spent on business needs, like buying lenses or software.

How to Do Bookkeeping

You can choose between using software or doing it manually:

1. Using Software: QuickBooks: A popular tool that tracks transactions and generates reports. It’s user-friendly but comes with a monthly fee.

2. Manual Tracking: Use a spreadsheet to record your income and expenses. Keep different tabs for each category to stay organized.

Example of Using a Spreadsheet Click on this link to

look at this simple Excel sheet to track your transactions

Recording Income:

For instance, if ABC Corp buys 20 units from you for $200, input this data into your income tracker. The total will automatically update.

Recording Expenses:

Track expenses like social media costs or rent. Enter the amount spent, and the sheet will categorize and sum up your spending.

Visualizing Your Finances

With this spreadsheet, you can see a breakdown of income versus expenses. For example, if you spent $1,000 on social media and $1,000 on rent, you’ll immediately see how these expenses impact your overall profit.

A well-organized bookkeeping system helps you understand your business’s financial health and avoid mistakes that can cost you opportunities. I hope this guide helps you manage your freelance business more effectively.

If you’re interested in using the spreadsheet I demonstrated, click here to download it.

Thanks for reading, and I hope this helps you on your journey.

Cheers,

Fahad Suleiman